Consumer loans for businesses
The very few banks offer consumer loans to businesses, but that does not mean that they do not exist. In this article, we have therefore created an overview of which banks offer corporate loans without collateral.
The fact that private individuals can raise unsecured consumer loans is a known matter, but what about businesses? It’s not as easy, we’ll believe the banks.
We have contacted all banks in Finansportalen’s overview of consumer loans and asked if they also offer unsecured consumer loans for companies. Only one of the 50 banks answered yes. This was Svea Finans.
Are you the only ones on the Norwegian market that offer unsecured loans to companies?
Yes, on this type of business loan where you get both answers and money in the day, says Kristine Jeanette Vestad, marketing manager at Svea Finans.
This is how Svea’s corporate loan works We have talked to Svea Finans to find out how this type of loan works and what is the real difference between a business loan and a consumer loan for private individuals.
What is the difference between applying for Business Credit and applying as a private individual?
– The difference is that one applies to loans to companies and the other people.
What is the risk for the applicant?
– The degree of risk for the applicant depends on whether or not the credit is secured.
What is the risk for you?
– The risk for Svea Finans is that the money can be lost by default. We take greater risk when we do not require security.
Therefore, you are refused a credit card and loan application
What happens if the company is unable to repay the loan?
– The credit will be sent for debt collection for further follow-up. We always try to find good repayment solutions with our customers if needed.
In what cases can a company need a corporate loan?
– There may be several reasons why a company needs a corporate loan. It may be that the company is in a growth phase and / or that they need extra liquidity to ensure operations.
What should the applicant think about before he / she takes up the company loan?
– The applicant should think about how the credit should be used and how the credit should be served.
Are these applications handled manually? How long is the treatment time?
– Business Credit is an electronic and automated solution. The company can withdraw money one business day after they have been granted the credit.
What are the average rates on such loans?
– The nominal annual interest rate is between 11.9 and 22.9%, depending on the credit score. The average interest rate is 16%. This type of loan is the alternative to a credit card, and therefore a safer and cheaper solution.
How can one provide security for such a loan?
The security that can be provided is bail – that is, the most common way is that the person with the right to sign in the company is personally responsible. This security is made in the application process. Consumer loans for starting a company The start-up phase is the most critical part for all newly established companies, and especially the financial must be in place for stability in the future. Here most people use equity and / or loans, and often also external investors.
To map out potential expenses associated with a start-up phase, you should first create an overview of capital requirements. How much money do you need for the wheels to go around before you eventually receive revenue through the company? How much do you need for equipment and the like?
If you also need to establish an AS (limited company), this will cost you NOK 30,000 in fees. This previously cost NOK 100,000, but in recent years has been significantly reduced.
Also read: What is a payment note? Company loan when you need liquidity Some companies are bailing on loans to prevent company wheels from stopping. Liquidity is the term for ability to pay, and describes the ability of the company to pay. The higher the liquidity, the greater the ability of a company to pay wages, taxes, development costs and the like.
As Svea has mentioned earlier, there may be several reasons why a company needs a corporate loan, among other things, that the company needs increased liquidity to ensure its operations.
Loan with payment reminder
Most banks Henry Higgins.no have been in contact with rejecting that they offer consumer loans to companies, but several banks mention that they can help in certain cases.
– We do not offer consumer loans to companies and have no plans for this either. For companies in need of funds due to short-term low liquidity or other relevant factors, we assist with short-term loans to solve acute and temporary liquidity challenges for the company, writes communication manager at SpareBank 1 Østlandet, Bjørn-Inge Haugan, in an e-mail for Henry Higgins.no.
The alternative: Search for consumer loans as an individual
Banks are positive about new regulations It is also possible to apply for consumer loans as a private person to ensure liquidity or start-up funds for the company, but if you fall on this solution it is important to remember that you have the personal responsibility for the risk.
– We only lend money to private individuals with social security numbers and not to companies with corporate numbers. Having said that, we have a clear impression that some entrepreneurs raise loans with Instabank that will be used to invest in a phase where one establishes business and it is difficult to obtain other capital for the business.
Tighten lending further with regulatory proposals
Berg says that he does not have figures on exactly how much of the bank’s loans fall into this group, but on the basis of customer surveys he knows that there is a group of “a certain size”. The terms for the consumer loan are determined on the same basis as otherwise, says the bank manager.